Cryptocurrency

Will Polkadot (DOT) price reverse course now that cross-chain messaging is live?

Improvement throughout the Polkadot (DOT) ecosystem has been slowly unfolding over the previous yr and a half and the work put in by builders is lastly beginning to bear fruit as parachain auctions end and the primary chains launched on mainnet. 

The following part of interoperability throughout the ecosystem is ready to kick off now that cross-chain performance is about to go stay. This subsequent step will enable Polkadot-based parachains to speak with one another and switch property between chains.

Right here’s a have a look at what the launch of the XCM messaging system means for the worth of DOT, the choices that are actually obtainable to DOT holders and the way this improvement will increase its performance throughout the Polkadot ecosystem.

Polkadot is unshackled

Up thus far, DOT had restricted makes use of and was principally remoted by itself community with out a lot to performance. Its most important features included staking, governance and for contribution in parachain crowdloans, which helped scale back the circulating provide however did little else to essentially spark demand.

The introduction of cross-chain communication enabled DOT transfers to numerous parachain networks and the variety of use instances for the DOT token on parachains like Moonbeam and Astar Community.

Information from Cointelegraph Markets Professional and TradingView reveals that the worth of DOT has been onerous hit by the six-month downtrend within the crypto market as its value has declined 73% from its all-time excessive at $55 on Nov. 4. 

DOT/USDT 1-day chart. Supply: TradingView

With the token now buying and selling at a notable assist/resistance degree, it stays to be seen if the power to switch DOT throughout numerous parachains will assist result in a rise in demand for DOT.

Associated: Polkadot launches cross-chain messaging system to unravel blockchain’s bridge downside

New use instances

One notable use for DOT that has been rising in recognition in current months is liquid staking and the minting stablecoins through the use of crypto property as collateral.

DOT can now be transferred to the DeFi-focused Acala parachain and deposited in its liquid staking contract in change for LDOT. LDOT can then be used as collateral to mint aUSD, the native decentralized stablecoin of Polkadot and Kusama.

DOT may also be utilized in numerous DeFi purposes together with yield farming, lending and borrowing. Because the introduction of cross-chain communication spreads all through the Polkadot ecosystem, extra makes use of for DOT are more likely to emerge, particularly as parachains roll out elevated performance.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, it’s best to conduct your individual analysis when making a choice.